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2023 Supreme(Online)(KER) 22677
HIGH COURT OF KERALA
A. Muhamed Mustaque, Shoba Annamma Eapen, JJ
K.RAMACHANDRAN – Appellant
Versus
PATHANAPURAM BLOCK PANCHAYAT – Respondent
CO 13 2020
ANSU VARGHESE, SRI.MANU RAMACHANDRAN, SRI.NAVEEN THOMAS T.KRISHNANUNNI (SR.), SUBHASH CYRIAC, SMT.PRINCY ZAVIER, S.SREEJITH (S-3453), T.SETHUMADHAVAN (SR.)
A unilateral determination of losses by one party to a contract is invalid without authorization, and the limitation period for claims begins upon contract termination.
Headnote:
Limitation - Contractual Disputes - Civil Procedure Code - Limitation Act - Section 113 - The court interpreted the limitation period under the Limitation Act in contractual matters, determining that the period begins upon contract termination, leading to the conclusion that the plaintiff's suit was timely.
Fact of the Case:
The plaintiff entered into a contract with the first defendant for road improvements but could not complete the work. The plaintiff sought recovery of unpaid amounts, while the defendant countered with claims of loss from non-completion.
Finding of the Court:
The trial court upheld the plaintiff's claim for unpaid work and declared the revenue recovery proceedings void, finding no merit in the defendant's limitation objection or claims regarding loss calculation.
Issues: The main issues revolved around the limitation period for filing the suit, the legality of the revenue recovery actions, and the correct quantum of the unpaid amount.
Ratio Decidendi: The court ruled that the limitation period begins upon termination of the contract and that unilateral loss calculations are invalid unless authorized by the contract, necessitating a counterclaim for such claims.
Final Decision: The appeal is partly allowed, granting the plaintiff Rs.16,07,906/- with interest.
JUDGMENT
A.Muhamed Mustaque, J.
This appeal was filed by the first defendant in O.S.No.78/2016 on the file of the Subordinate Judge, Punalur. The appellant is the Pathanapuram Block Panchayath. The first respondent in this appeal is the plaintiff. He is also a contractor.
2. We shall refer to the parties with reference to their status in the trial court. The plaintiff entered into an agreement on 26.6.2003 with the first defendant. This agreement was for undertaking work related to the improvements, metalling and black topping of a road Panayam– Puthuvel Kodiyattu Kuzhy Erappakuzhy Myladumpara in Pattazhi Grama Panchayath. The total cost of the work was fixed at Rs.88.10 lakhs. Though the plaintiff commenced the work, he could not complete the work within the stipulated time period. The plaintiff submitted part bill for the works done and received an amount of Rs.32,25,652/- on 27.4.2004. It appears that certain additional works needed to be carried out but the revised estimate was not approved. That appears to be the bone of the dispute between the parties. The value of the unpaid work is the subject matter of the plaint claim. The first defendant admitted that additional work would have to be done for the completion of the original work and the revised estimate was forwarded to the sanctioning authority. But the Government declined the sanction for the revised estimate. According to the first defendant, the plaintiff did not carry out the original work and the contract was terminated at the risk and cost of the plaintiff. The first defendant also claims that they sustained a loss to the tune of Rs.26,76,658/- due to the non-completion of the work by the plaintiff. The first defendant is initiating revenue recovery.
3. The plaintiff, apart from seeking recovery of the amount, also sought prayers to declare that the revenue recovery proceedings initiated were illegal and void.
4. The trial court overruled the objections of maintainability of the suit and noted that no counterclaim has been laid, decreed the suit allowing recovery of the unpaid value of the work.
5. The learned senior counsel appearing for the appellant Panchayath assailed the impugned judgment mainly on three grounds:
I. Related to limitation.
II. Related to the declaratory prayer against revenue recovery proceedings.
III. Quantification of the amount.
6. On the point of limitation: The agreement was executed on 26.6.2003. As seen from Ext.A9, the time was extended for completing the work upto 31.03.2007. The suit was filed only on 18.02.2012. The learned senior counsel argued that there was no pleading to exclude any grounds of exemption from limitation law as referrable under Order VII Rule 6 of the Civil Procedure Code (CPC). It is further submitted that the challenge made by the plaintiff before this Court against the revenue recovery proceedings cannot revive the time which was barred by limitation. The main cause of action itself has been shown with reference to the judgment of this Court dated 09.12.2011. The learned senior counsel appearing for the plaintiff referred to Exts.A9 and A9(a). Ext.A9 shows that the contract was terminated only on 24.01.2011. It is submitted that the limitation has to be reckoned with reference to the date on which the contract was terminated and the first defendant refused to pay the amount.
7. As seen from the pleadings and the documents, the original period was extended upto 31.3.2007. It is further seen from Ext.A9(a), the Panchayath also requested, as per its letter dated 29.12.2010, the plaintiff-contractor to complete the work. The contract was terminated only on 24.01.2011. Further, the revenue recovery proceedings were initiated only on 25.10.2011. The right to sue accrues in a contractual matter, if no period for stipulation of payment is made, the period would run from the date of refusal. In such cases, Article 113 of the Limitation Act would apply. No period for payment was fixed. In this case, the suit was filed on 1
